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Wednesday, November 09, 2011

"Screwflation", a term coined by Wall Street guru, Doug Kass, describes how falling wages and rising costs of basic goods are screwing squeezing the middle class. Moreover, the culture of greed that has escalated over the last three decades, leaving an unprecedented redistribution of wealth from the middle class to the top one percent has negated any possibility of a robust middle class America in the future.

This younger generation of Americans - saddled with college and housing debt, yet scarce job opportunities - now face the highest unemployment since World War II. To make matters worse, older Americans are forced to stay in their jobs longer, limiting employment prospects even more.

Middle-income jobs are disappearing from the economy. The share of middle-income jobs in the United States has fallen from 52% in 1980 to 42% in 2010. Middle-income jobs have been replaced by low-income jobs, which now make up 41% of total employment.

17 million Americans with college degrees are doing jobs that require less than the skill levels associated with a bachelor’s degree.

Real wages have stagnated over the past two decades, and in recent months, have actually fallen. Over the past year, nominal wages grew only 1.7% while all consumer prices, including food and energy, increased by 2.7%.

Wages and salaries have fallen from 60% of personal income in 1980 to 51% in 2010. Government transfers have risen from 11.7% of personal income in 1980 to 18.4% in 2010, a post-War high. There are 8.5 million people receiving unemployment insurance and over 40 million receiving food stamps.

Health care spending increased from 9.5% of personal consumption in 1980 to 16.3% in 2010.

The average cost of one year of college is $21,000. After adjusting for inflation, it has risen 72% since 1990.

The share of personal consumption spent on food and energy has risen from 13.4% in 2002 to 15.3% in 2010.

Household net worth declined from $65.7 trillion in the second quarter of 2007 to $56.8 trillion in the fourth quarter of 2010. The middle class, which has much more of its net worth tied up in home equity, has borne the brunt of this decline.

Over the past three decades, household debt as a share of disposable income increased from 68% to 116%.